Whether you’re conservative or liberal, Republican, Democrat, or Libertarian, there’s one thing upon which most people will agree: our federal government is broken. The American economy crashed in 2008, and though the experts say that the Great Recession has officially passed, most people would beg to differ. The sad truth is that most Americans were hurt in the collapse; they either lost wealth or income or both. Now, two long years later, far too many people are still struggling and waiting for a dysfunctional government to implement effective solutions.
The National Bureau of Economic Research (NBER) reported on Monday that the most severe recession since the Great Depression had ended in June of last year. The NBER made their determination based on several economic indicators, including total output and industrial production. The facts, according to the Economic Cycle Research Institute (ECRI), are that we’ve now regained 69% of the GDP and 38% of sales. The problem is that only 9% of private sector jobs have returned.
As of the end of August, national unemployment was still stuck at 9.6% and the broader U-6 rate, which includes the underemployed, was at 16.7%. So, it doesn’t take a psychologist to understand that with nearly 15 million unemployed Americans, people are justifiably angry with a government that was able to restore the banks, but seems unfazed itself and unable to help the average citizen.
With the 2010 midterm elections now only six weeks away, this sense of anger toward what’s perceived as an ineffective and self-serving federal government is what’s feeding public opinion. Wall Street brought down the economy, but they’re doing fine. Washington set the stage for the collapse, sat idly while it occurred and has not yet brought back the wealth or employment that was taken from the middle and working classes. Is the federal government culpable? Absolutely — but Americans would be well served to recall the depths of the pit from which we’re trying to crawl.
Although the recession that “ended” last June officially started in December of 2007, by the end of July 2008, unemployment was at a comparatively low 5.7%, with total job loss for the year of 463,000. Then in September, Lehman Brothers filed for bankruptcy and the freefall began. By October all lending had stopped; the GDP was down 6%; job loss totaled 1.7 million, global trade collapsed, and net household worth had dropped by $5 trillion.
President Bush signed the $700 billion Troubled Assets Relief Program (TARP) into law in October, and although it did feed the thieves behind the housing crash, it could very well have prevented the 25% unemployment levels that hit in the 1930s. But TARP or not, when President Obama took office, the economy was hemorrhaging nearly 600,000 jobs per month, and total job loss for 2008 had been recalculated at 3 million.
The new administration was desperate to enact measures to prevent further economic decay, but with interest rates nearly at zero percent, monetary policy had already been exhausted. So, in response, President Obama championed the only course of action still available to the federal government — a stimulus.
It was one month into the new Democratic administration, the economy was in dire straits, and the number of jobs lost each month was still increasing. The federal government needed to act, so a stimulus spending plan was quickly formed, and the American Recovery and Reinvestment Act (ARRA) was passed by Congress and signed into law on February 16. Sadly, a sign of things to come, the legislation was passed without a single Republican vote in the House and only three in the Senate. The most partisan period in contemporary politics had begun.